Your company is considering expanding its warehouse facility in Memphis, Tenness

Question

Your company is considering expanding its warehouse facility in Memphis, Tennessee. The expansion will cost $50,000 and will be depreciated as a 7-year MACRS asset for ten years. What is the depreciation expense for Year 3? For Year 7? For year 10?

Note: Use the MACRS Depreciation percentages depicted in Table-"B" of the powerpoint presentation for Unit 4 - Lesson 3

Percentage By Recovery Years Recovery Year 3 Years 5 Years 7 Years 10 Years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals: 100% 100% 100% 100%

Explanation / Answer

Cost of Machine Depreciation Rate Depreciation expense Year 3 50000 18% 9000 Year 7 50000 9% 4500 year 10 50000 0 0

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